MNM3703/202/2/2018

Tutorial Letter 202/2/2018

Sales Management

MNM3703

Semester 2
Department of Marketing and
Retail Management
FEEDBACK ON ASSIGNMENTS 02 AND 03

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CONTENTS
1 Introduction

2 Feedback on Assignment 02

3 Feedback on Assignment 03

4 Concluding remarks

1 INTRODUCTION

Dear Student,

By now you would have received Tutorial Letter 201 with my feedback on your first assignment
and you would have completed Assignment 02, as well as the self-assessment assignment,
Assignment 03. Please compare your answers with the feedback given in this tutorial letter.
Remember that merely reading through the feedback on these assignments will not help you much
in getting to know how to structure an answer in the examination. Study the feedback given below
and make sure you understand why you might have answered some questions incorrectly.

As your lecturer, I wish to remind you that I am at your disposal for academic enquiries. My
contact details are as follows:

Mrs Yu-ting Hung-Joubert

Office: AJH van der Walt Building 5-55, Muckleneuk Campus, Pretoria
Tel: 012 429 8303
E-mail: marketing@unisa.ac.za

I am here to assist you, but please note that you should only contact me if you have academic
enquiries (that is enquiries about the content of the module). The Department of Marketing and
Retail Management can be contacted at telephone number 012 429 8303. Administrative enquiries
concerning fees, receipt of assignments, examination dates etc should be directed to the relevant
administrative departments. See Tutorial Letter 101 for more details.

2 FEEDBACK ON ASSIGNMENT 02

QUESTION 1

The correct answer is option 4 because referent power is based on the leader’s charisma and
ability to inspire. Referent power is a type of personal authority. Options 1, 2 and 3 are incorrect
because they do not correspond with the statement. The correct answer can be found on page
140 of the prescribed textbook.

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QUESTION 2

The correct answer is option 1 because a salesperson approach include simplicity, which refers
to a remuneration plan that is easy to understand. Therefore, it is advisable that the sales
manager uses no more than three measures to calculate the salesperson’s remuneration. Option
2, 3 and 4 are incorrect because they are organisational approaches namely to correlate efforts
and results with rewards, to attract and keep competent salespeople and to be flexible and
maintain stability. The correct answer can be found on page 167 of the prescribed textbook.

QUESTION 3

The correct answer is option 2 because the customer acquisition cost metric calculates the
average marketing and sales costs associated with acquiring a new customer. Option 1 is the
incorrect answer because the cost per lead metric determines the marketing or advertising cost for
every lead the organisation generates and it is normally calculated per campaign to indicate how
expensive or effective it is. Option 3 is incorrect because the target volume metric determines if
the sales level in the number of units is sufficient to cover both the fixed costs and the
organisations profit target. Option 4 is incorrect because the sales expenses metric calculates all
expenses related to a sale, such as travel, entertainment, printing, shipping, use of other internal
resources and third-party expenses. The correct answer can be found on page 233 of the
prescribed textbook.

QUESTION 4

The correct answer is option 3 because an example of a non-productivity bonus is giving

someone extra money for their birthday month. Option 1 is incorrect because a salary plus
commission plan provides an assured income on a regular basis with the added advantage of
earning more money for selling more. Option 2 is incorrect because commission plus bonus pays
salespeople based on how much they have sold and if they reach a certain goal, they receive an
added bonus. Option 4 is incorrect because a productivity bonus is linked to the performance of a
salesperson and can be paid for sales, units sold, new accounts acquired and territory
performance. The correct answer can be found on page 178 of the prescribed textbook.

QUESTION 5

The correct answer is option 2 because laissez-faire leadership is when a sales manager leaves
his/her sales team to handle their responsibilities and obligations in their own manner. Option 1 is
incorrect because democratic leadership is when a manager actively seeks the opinions and ideas
of the sales team and they collectively look at and moderate the inputs. Options 3 and 4 are
incorrect because they are not types of leadership discussed in the prescribed material. The
correct answer can be found on page 141 of the prescribed textbook.

QUESTION 6

The correct answer is option 1 because input measures focus on a salesperson’s efforts that
he/she controls directly, for example, the number of days worked. Options 2, 3 and 4 are incorrect
because they are examples of output measures, which relate to a salesperson’s results and
provide an indication of the salesperson’s ability to close a deal. The correct answer can be found
on page 193 of the prescribed textbook.

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QUESTION 7

The correct answer is option 2 because Hertzberg’s motivation-hygiene theory looks at job
satisfaction and dissatisfaction factors, and an example of a dissatisfaction factor is working
conditions. Option 1 is incorrect because Vroom’s expectancy model is based on expectancy
(effort will lead to acceptable performance), instrumentality (performance will be rewarded) and
valence (the value of the rewards is highly positive). Option 3 is incorrect because Adam’s inequity
model is based on inputs (everything that goes into work) and output (everything that people get
out of work). Option 4 is incorrect because Maslow’s hierarchy of needs theory is based on the
personal needs of a person being fulfilled in some sort of relevance or importance. The correct
answer can be found on page 156 of the prescribed textbook and page 151 of the case study
book.

QUESTION 8

The correct answer is option 3 because the case study mentions the use of exciting point-of-
sales and in-store promotions which offered customers tasting and wet demos to sample the
product. Options 1, 2 and 4 are incorrect because the options include online couponing and
rebates which were not discussed in the case study book. The correct answer can be found on
page 208-209 of the prescribed textbook and page 49 of the case study book.

QUESTION 9

The correct answer is option 4 because the case study mentions that Blue Apple has a
horizontal structure coupled with professionalism. Options 1, 2 and 3 are incorrect because they
are mentioned in the case study. The correct answer can be found on page 38 of the prescribed
textbook and page 32 of the case study book.

QUESTION 10

The correct answer is option 3. 2Stroke and CWC implement a new special on every day of the
campaign, revealed at 09:00 every morning with only 35 units of each promotional item available.
The aim of the tactic is to create a sense of urgency that encourages impulse purchasing. A price
reduction is a temporary reduction in price for a limited period. Option 1 is incorrect because
samples is when consumers get one sample for free to try out. Option 2 is incorrect because
coupons are when price deals and cents-off deals are displayed on a coupon at the shelf where
the products are displayed. Option 4 is incorrect because a lucky draw is when the consumer is
entered into a draw to win a prize. The correct answer can be found on page 9 in the case study
book and on page 208 in the prescribed textbook.

QUESTION 11

The correct answer is option 2. Pull marketing requires huge spending on advertising to make
brands and products a household name. This intensifies consumer demand by directing sales
promotion strategies at the consumer. The Bio-Strath campaign uses advertising with a primary
objective of increasing average monthly sales and to build the brand. Options 1, 3 and 4 are
incorrect because the case study does not mention any of these concepts. The correct answer can
be found on page 214 to 215 in the prescribed textbook and on pages 26 to 30 in the case study
book.

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QUESTION 12

The correct answer is option 1. Africa Media Online views its database as a goldmine. Keeping
it in a CRM system that is geared to its needs helps it make the most of its customers. It has sales
staff to take responsibility for different groups of clients, to keep adding valuable information to the
database and to provide good customer service. Options 2, 3 and 4 are incorrect because the
case study does not refer to those terms. The correct answer can be found on page 17 in the case
study book.

QUESTION 13

The correct answer is option 2. Option 1 is incorrect because it describes a line organisation
which is the simplest organisational structure and is mostly used by small companies or
departments in a large organisation. Option 3 is incorrect because it refers to a horizontal
organisation that eliminates management levels and specialised departmental functions. Option 4
is incorrect because it refers to a functional organisation which is characterised by the benefits of
specialised middle management with line authority to ensure that their plans are carried out. The
correct answer can be found on page 36 in the prescribed textbook.

QUESTION 14

The correct answer is option 3. Option 1 is incorrect because it describes improved time and
territory efficiency as a training objective. Option 2 is incorrect because it refers to improved
morale; being knowledgeable about a product builds salespeople’s confidence as they are in a
position to answer or provide detailed and up-to-date information pertaining to the product. Option
4 is incorrect because it refers to improved use and application of technology. The correct answer
can be found on page 120 in the prescribed textbook.

QUESTION 15

The correct answer is option 2. There are four principles underlying the management-by-
objectives principle. Option 1 is incorrect because in any sales environment, it is ideal to reward
high performance as the incentives motivate sales people to excel in what they do and, in return,
this contributes to the company’s image and reputation. Option 3 is incorrect because the open-
door policy advocate that the sales manager must be accessible at all times and promotes an
environment that fosters a good relationship with the sales team. Option 4 is incorrect because the
integration-of-goals technique suggests that the salespersons’ personal goals must not be
addressed in isolation of their overall objectives. The correct answer can be found on page 197 in
the prescribed textbook.

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3 FEEDBACK ON ASSIGNMENT 03

a) Refer to pages 178-181 in the prescribed textbook and pages 118-123 of the study guide.

Step 1: Review job description (max 2 mark theory, 1 mark application)

A good job description is critical when evaluating a sales force. Management has to understand
what a salesperson is supposed to do and also how and when. This is essential for management
to know whether the sales force performed well or not.

Before the sales force is evaluated, management needs to understand and explicitly state what is
expected from the sales force. Job descriptions are obtained by analysing what the job entails,
which means understanding the core competencies and skills required to complete the tasks of
the job. Job descriptions clearly identify and spell out the responsibilities of a specific job. If
management clearly understands the responsibilities of the sales force, this will enable them (the
managers) to determine how well the salespeople have performed these responsibilities.

Application: salespeople who would be responsible for the marketing and sales of the products.

Step 2: Establish basic policies and sales goals and objectives (max 2 mark theory, 1 mark
application)

Management should establish some basic policies for the evaluation of the sales force. They have
to develop performance management systems in order for the salespeople to achieve the
organisation's goals. The policies should establish who will do the rating, when and how often it
should be done, how the results will be used and on what standards the sales force will be
evaluated. The skills, outputs and accomplishments which will be evaluated should be derived
from the job description and be written into the basic performance management policy. The policy-
makers must determine exactly what areas of performance are going to be evaluated.
Management should share the information about expectations with their sales force and how best
these expectations and goals can be achieved. The salespeople must understand, approve and
enthusiastically support these goals and objectives.

When salespeople are given tasks, they should be aware that their performance will be evaluated.
This evaluation should be conducted in a systematic and professional manner. Organisations
should therefore have policies in place to assist the salespeople to achieve the goals of the
organisation and also to assist management in evaluating the salespeople. These policies may
provide the following types of guidelines:
- Who will conduct the performance evaluation?
- When will the evaluation be done each year?
- What will be required from the salespeople (e.g. documentation of evidence)?
- How will the results be used?
- What are the consequences of the results (e.g. what will the sales force staff receive if they
have performed well, and what will happen if they have underperformed)?
- What standards will be used to measure the performance of the sales force?
- What areas of performance are going to be evaluated?

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It is therefore important that organisations share this information with their employees so that they
are not set up to fail. Employees need to know exactly what the organisation expects of them and
what will happen if they fail to meet expectations. These expectations can be regarded as the
goals of the objectives.

Application: salespeople who would be responsible for the marketing and sales of the products
and are expected to do the following each month
 find 10 new prospects
 meet sales target of R5 000
 service existing customers
 compile progress reports

Formal reviews will be done by Ms Mkhize and Mr Mbeki every six months which was
communicated to them. During these formal reviews, Ms Mkhize and Mr Mbeki provides feedback
on their performance, both positive and negative on their strengths and weaknesses. Those that
did not do well were sent to more training programmes focusing on specific weaknesses that they
had identified and those that did well were rewarded with bonuses.

Step 3: Determine performance evaluation standards and criteria (max 2 mark theory, 1
mark application)

Performance standards are planned benchmark levels that sales managers expect the sales force
to reach at specific times throughout the year. The performance standards (the input) must be
mutually agreed between the sales force and management as to what level of performance is
expected in some future period and the sales force must be committed to achieve these
standards. These standards serve as a guide in planning the work that should be done (the
output). To measure the efficiency of the organisation's selling effort, management must then
balance the output against the input. Many organisations assign different weights co different
performance objectives or several rating scales and balanced scorecards may be applied in order
to evaluate each performance criterion.

A performance standard is defined as a management-approved expression of the performance

threshold, requirements that must be met to be appraised at a particular level of performance.
These serve as a guideline as to what the output should be or what work needs to be done. In the
process of determining the standards and criteria of evaluation, management needs to assign
weights to the various areas of evaluation. This means that if a core competency is for the
salesperson to interact with clients, management should decide how much weight this aspect will
carry when the performance is viewed holistically. For example, client interactivity could be given a
weighting of 30%, sales achieved could be weighted 35% and post-sales services could be
weighted 15%.

Application: Having defined the roles of the salespeople would be expected to do the following
each month
 find 10 new prospects
 meet sales target of R5 000
 service existing customers
 compile progress reports

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Step 4: Agree on individual performance standards (max 2 mark theory, 1 mark application)

Once the standards have been set it is vital that these standards and benchmarks are
communicated to the salespeople. Even if the salespeople were involved in establishing these
standards, it should still be communicated to ensure that there are no misunderstandings about
the standards against which the salesperson's performance will be evaluated and compared.

In step three, we established the universal standards, which may differ from one organisation to
another. However, employees are all unique; their abilities, skills and responsibilities may
therefore be unique to their situation. As much as the standards are universal, individual
performance standards need to be set and agreed on. For example, Peter and John might both be
salespeople, but if Peter was contracted to assist in increasing the client base, then the focus in
his evaluation will be on the tasks he initiated to attract new clients to the company. If John was
contracted for some other purpose, the focus of his evaluation will be on that area. It is essential
that these standards be communicated to the salespeople, as this will help them to achieve what
is expected of them.

Application: Ms Mkhize communicated these expectations to them on their first day and arranged
a meeting with each salesperson to discuss it in detail. During the meeting each salesperson
could adjust (within reason) what was expected of them.

Step 5: Compare performance to standards (max 2 mark theory, 1 mark application)

More than one source is used to evaluate salespeople. All the accumulated information from the
evaluation bases utilised for evaluating salespeople's performance should be interpreted. This
step involves comparing the salesperson's efforts and results with the predetermined and agreed-
upon standards and benchmarks. This will be done on a continuous basis, sometimes once a
month, in some organisations one mid-year formal review and again at the beginning of a new
year. The performance rating will have a direct impact on the calculation of salary adjustments and
short-term incentive plans if applicable.

In essence, this process entails interpreting the information given to management by the
salespeople, thus comparing their efforts with the standards set. According to Lab Space (2014),
management can base their comparison on the monitoring information collected for services or
activities organised. Then they can summarise the outcomes, as planned, versus the actual
results.

Application: Ms Mkhize then stated that formal reviews will be done every six months and the
monthly reports are compared to the set standard communicated to employees at the beginning.

Step 6: Discuss results with salespeople, including variations and improvements (max 2
mark theory, 1 mark application)

It is important that sales managers give prompt and meaningful feedback to their salespeople,
whether they have performed well or poorly. Salespeople are provided with a written copy of their
performance review and the sales managers discuss the performance evaluation with each
salesperson. Well-performing salespeople should be praised as it will enhance their self-esteem
and self-confidence and they will be more motivated to achieve higher accomplishments. Poorly
performing salespersons should be promptly informed about the need for improvement and that
they can actually be dismissed for unproductivity if they do not improve within a specific period of

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time. Therefore the manager can require the salesperson to commit to performance improvement
to pre-agreed-upon goals.

Once the performance has been compared with the predetermined standards, it is essential that
the results obtained be discussed with the salespeople. Management needs to provide feedback
on whether salespeople performed well or not. Where there are differences between the targets
and the actual performance, these should be discussed and management should determine why
these variations exist. This will assist them in establishing the means to improve future
performance. In order for salespeople to perform well, they need to be motivated and self-
confident. A confident salesperson is a great asset to an organisation. When discussing the
results, management should use this platform as an opportunity to motivate the salespeople.

Application: During these formal reviews, Ms Mkhize provides feedback on their performance,
both positive and negative on their strengths and weaknesses. Those that did not do well were
sent to more training programmes focusing on specific weaknesses that they had identified and
those that did well were rewarded with bonuses.

Step 7: Take corrective action if necessary (max 2 mark theory, 1 mark application)

Once the sales manager and the salesperson have determined the reasons for performance
variations, management must take action. When the salesperson's performance is below
standard, and it is due to a mistake made by the organisation, it is necessary that the policies
and/or strategies used in the Implementation of the Performance Evaluation Monitoring System
(IPEMS) be revised. If it is clear that the salesperson did not perform according to the standards,
the manager should take corrective action by redirecting the salesperson's effort, enhancing the
individual's personal development, perhaps through formal retraining, and make suggestions on
how to improve performance.

Let’s say, for example, Charlie has completed the evaluation process and it has been found that
he underperformed during the specified period. Management needs to decide on the course of
action as per the job evaluation policy. This means that both parties need to come up with ideas or
ways to remedy the situation and assist in improving performance. Reasons for differences must
also be given. Key objectives of corrective action are
- to remove defects
- to attain a new state of process performance
- to maintain or enhance the efficiency and effectiveness of the evaluation process

Application: After each formal review, Ms Mkhize determines whether the job roles and
responsibilities are still relevant and whether the targets should be adjusted or not. She found that
most her salespeople were unable to find 10 prospects every month and therefore decided to
decrease the number based on the average of 7.

b) Refer to page 181 in the prescribed textbook.

Any FOUR can be discussed for one mark each (max 4 marks theory)

 Reliability - The rating criteria should be stable over time and consistently applied.

 Job relatedness - The performance evaluation method should be related to the specific job
activities being evaluated.

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 Validity - Valid and accurate assessments should be provided and should measure what they
are supposed to measure.
 Standardisation - The performance measurement instrument and how the salesperson is
evaluated should be consistent throughout the organisation.

 Comparability - It must be possible to compare the performance of each salesperson across

the organisation.

 Discriminability - Differences in performances of individual salespeople must be identifiable.

 Usefulness -The method used should be effective in order for sales managers to make the
necessary decisions concerning promotions, terminations and compensation.

 Practicality - The performance evaluation process must be easy to understand and to

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implement without taking too much time.

4 CONCLUDING REMARKS

You are once again invited to contact me if you experience any academic problems with your
studies.

I wish you success with your studies!

Mrs Y Hung-Joubert
Department of Marketing and Retail Management
Unisa

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